Financial Data and Key Metrics Changes - Grid Dynamics reported revenues of $100.4 million for Q1 2025, exceeding guidance and representing a year-over-year growth of 25.8% [32] - Non-GAAP EBITDA for the quarter was $14.6 million, outperforming guidance and reflecting a year-over-year increase from $10.3 million [32][39] - GAAP net income was $2.9 million, a decrease from $4.5 million in the previous quarter, attributed to higher operating costs [39] Business Line Data and Key Metrics Changes - Retail accounted for 31.4% of total revenues, growing 28% year-over-year but declining 3.7% sequentially [33] - Finance became the second largest vertical, contributing 24.9% of total revenues with a year-over-year growth of 144.3% [34] - TMT represented 23.5% of revenues, remaining flat sequentially and declining 1.8% year-over-year [34] Market Data and Key Metrics Changes - Revenues from top five customers accounted for 35.6% of total revenues, down from 39.6% a year ago [37] - The total customer count decreased to 204 from 211 in the previous quarter, driven by efforts to rationalize the customer portfolio [38] Company Strategy and Development Direction - The company aims to align investments with changing industry needs, focusing on technological leadership and AI capabilities [12] - Grid Dynamics is expanding its presence in India, which is becoming a hub for multi-agent and multi-modal platform engineering [16][72] - The strategy includes diversifying into new industries such as manufacturing, pharmaceuticals, and fintech while enhancing AI offerings [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainties but expressed confidence in the stability of client projects and demand [13][49] - The company maintains its full-year revenue outlook of $415 million to $435 million, expecting stronger performance in the second half of 2025 [12][41] - Management noted that partnerships contributed 16% of total revenue in Q1 and anticipate this to accelerate throughout 2025 [13] Other Important Information - The company successfully integrated engineering teams from recent acquisitions, enhancing capabilities in banking and financial services [9] - AI initiatives are gaining traction, with a growing pipeline of opportunities and a shift towards enterprise-scale implementations [10][29] Q&A Session Summary Question: Client behavior and decision-making pace - Management noted no major impacts from recent economic activities, with strategic projects continuing uninterrupted [48][49] Question: Guidance for 2025 and contractually committed work - Management indicated that business decisions for 2025 have been made, contributing to a strong outlook despite some cautiousness [52][54] Question: Hiring intentions and employee utilization - The company has maintained a consistent hiring strategy, focusing on internal skill development rather than solely relying on market talent [56][58] Question: Changes in client behavior in retail and TMT verticals - Management reported stable client behavior, particularly in online services, with no expected slowdowns from major clients like Apple [62][68] Question: Growth drivers for the second half of 2025 - Management expects growth across various verticals, with a focus on existing and new clients contributing to the anticipated ramp-up [80][89]

Financial Performance - Total revenues for Q1 2025 were $100.4 million, representing a year-over-year growth of 25.8%[7] - GAAP net income for Q1 2025 was $2.9 million, compared to a net loss of $3.9 million in Q1 2024[7] - Non-GAAP EBITDA for Q1 2025 was $14.6 million, up from $10.3 million in Q1 2024[8] - Non-GAAP net income for Q1 2025 was $9,952, up from $7,617 in Q1 2024, reflecting a year-over-year increase of 30.5%[32] - Non-GAAP diluted EPS for Q1 2025 was $0.11, compared to $0.10 in Q1 2024, indicating a 10% increase[32] Revenue Breakdown - The Finance vertical saw a remarkable revenue increase of 144.3% year-over-year, contributing 24.9% of total revenues[3] - Revenue from the Finance vertical surged to $25,028, representing 24.9% of total revenues, compared to $10,243 or 12.8% in Q1 2024[34] - The Retail segment generated $31,521 in revenue, accounting for 31.4% of total revenues, up from 30.9% in Q1 2024[34] - Revenues for Q1 2025 reached $100,415, an increase of 25.9% compared to $79,817 in Q1 2024[29] Cash Flow and Assets - Cash provided by operating activities was $9.4 million for Q1 2025, compared to $3.2 million for Q1 2024[14] - Total current assets as of March 31, 2025, were $421,681, slightly down from $423,304 as of December 31, 2024[27] - Total assets as of March 31, 2025, were $590,899, a slight decrease from $592,192 as of December 31, 2024[27] - Total liabilities decreased to $73,538 as of March 31, 2025, from $74,363 as of December 31, 2024[27] Future Projections - The company expects full-year 2025 revenues to be in the range of $415 to $435 million, indicating a year-over-year growth of 18.4% to 24.1%[10] - The second quarter revenue is projected to be between $100 million and $102 million[14] Operational Highlights - Total headcount increased to 4,926 as of March 31, 2025, up from 3,892 a year earlier[14] - The company signed several sizable deals in Q1 2025, including engagements in automotive, financial, and CPG sectors[4] - The partnership business is expected to grow in 2025, with a strong pipeline of migration and modernization efforts[5] Compensation and Expenses - Stock-based compensation increased to $10,743 in Q1 2025 from $11,339 in Q1 2024[32]

Core Viewpoint - Grid Dynamics (GDYN) is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended March 2025, with earnings expected to be $0.09 per share, reflecting a +28.6% change, and revenues projected at $98.29 million, up 23.1% from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is scheduled for May 1, and the stock may rise if the reported numbers exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Grid Dynamics is lower than the consensus estimate, resulting in an Earnings ESP of -11.11%, indicating a bearish outlook from analysts [10]. - The stock currently holds a Zacks Rank of 3, making it challenging to predict a beat on the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Grid Dynamics exceeded the expected earnings of $0.10 per share by delivering $0.12, resulting in a +20% surprise [12]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [13]. Industry Comparison - Unisys (UIS), another player in the IT Services industry, is expected to report a significant decline in earnings per share of $0.24, reflecting a -700% year-over-year change, with revenues projected at $441 million, down 9.6% from the previous year [17]. - The consensus EPS estimate for Unisys has been revised 260% lower in the last 30 days, resulting in an Earnings ESP of 0.00%, combined with a Zacks Rank of 3, indicating uncertainty in predicting a beat on the consensus EPS estimate [18].

Core Viewpoint - Grid Dynamics (GDYN) is facing challenges due to rising operational costs and stiff competition, but its long-term growth is supported by AI initiatives, strategic partnerships, and acquisitions [1][2][12]. Group 1: Financial Performance - GDYN's shares have decreased by 26.2% in the past month, underperforming the broader Zacks Computer and Technology sector's decline of 7.7% and the Zacks Computers - IT Services industry's drop of 11.1% [1]. - The company reported a 22.6% year-over-year increase in operating expenses in the fourth quarter of 2024, attributed to higher costs in engineering, research, sales and marketing, and general administration [1]. Group 2: Competitive Landscape - GDYN operates in a highly competitive IT consulting and services market, facing competition from established players like Accenture, Wipro Limited, and Infosys, which have also seen declines in their stock prices but have outperformed GDYN [2]. Group 3: Growth Drivers - The company is expanding its customer base and forming strategic partnerships, which are crucial for its long-term growth and market position [3]. - GDYN's AI capabilities are gaining momentum, with a significant expansion of its AI portfolio aimed at Fortune 1000 companies across various industries [4]. - The company has a strong track record of AI success in key industries such as Retail, CPG, Manufacturing, Finance, and TMT, demonstrating its ability to drive innovation and efficiency [5]. Group 4: Strategic Partnerships and Acquisitions - GDYN's expanded partnership with Microsoft now includes OpenAI and GitHub, enhancing its AI capabilities and positioning it as a key player in enterprise AI transformation [6]. - The acquisition of U.K.-based JUXT in the fourth quarter of 2024 has strengthened GDYN's expertise in banking and financial services, attracting interest from U.S.-based global banks [8]. - The acquisition of Argentina-based Mobile Computing in October 2024 has improved GDYN's global delivery capabilities and expertise in digital transformation across various industries [9]. - Strategic partnerships, particularly with hyperscalers, contributed 18% to GDYN's total revenues in 2024, indicating their growing importance [10]. Group 5: Future Outlook - Despite rising operational costs and competition, GDYN is well-positioned for expansion through continued investment in AI and cloud innovation [12].

Financial Performance - Grid Dynamics reported record revenues of $350.6 million for the year ended December 31, 2024, representing a 12.0% increase from the previous year[256]. - Gross profit margins remained steady at 36.2% for both 2024 and 2023[256]. - The company reduced its loss from operations to $2.1 million in 2024, down from $5.6 million in 2023[256]. - Net income for 2024 was $4.0 million, marking a significant turnaround after four consecutive years of net losses[256]. - Non-GAAP EBITDA grew 18.6% to $52.5 million for the year ended December 31, 2024[256]. - The cost of revenues increased by $23.8 million, or 11.9%, to $223.6 million in 2024, primarily due to higher headcount to support revenue growth[296]. - Gross profit rose to $127.0 million, an increase of $13.9 million from $113.1 million in 2023, with a stable gross margin of 36.2%[297]. - Engineering, research, and development expenses increased by 24.5% to $18.3 million, reflecting continued investments in customer delivery operations and software development[299]. - Sales and marketing expenses grew by 18.5% to $28.6 million, driven by investments in the sales organization and new sales initiatives[301]. - General and administrative expenses increased by 2.9% to $82.1 million, with a decrease in expenses as a percentage of revenues from 25.5% in 2023 to 23.4% in 2024[304]. - Interest and other income, net rose to $13.2 million from $10.4 million in the prior year, primarily due to income from money market funds and an increase in the fair value of marketable equity securities[306]. - The provision for income taxes was $7.0 million in 2024, compared to $6.6 million in 2023, with the effective tax rate decreasing from 136.5% to 63.4%[308]. - For the year ended December 31, 2024, GAAP net income was $4.041 million, a significant improvement from a net loss of $1.765 million in 2023 and a loss of $29.214 million in 2022[314]. - Non-GAAP net income for 2024 increased to $37.222 million compared to $31.684 million in 2023, and $38.150 million in 2022[317]. - Non-GAAP diluted EPS for 2024 was $0.47, compared to $0.41 in 2023 and $0.53 in 2022[317]. Acquisitions and Growth - The company acquired Mobile Computing S.A. on October 4, 2024, expanding its client portfolio in various industries[257]. - On September 26, 2024, Grid Dynamics acquired JUXT Ltd., enhancing its capabilities in the finance vertical and opening new opportunities in Europe[258]. - The total number of employees increased to 4,730 in 2024, up from 3,920 in 2023, reflecting a growth in workforce[264]. - The Finance vertical saw revenues double to $60.2 million, making it the largest contributor to overall revenue growth for the period[292]. - Retail remained the largest vertical, contributing 32.5% of total revenues, with an 11.1% growth over 2023[289]. Customer and Revenue Concentration - Customer concentration decreased, with the total number of customers dropping from 275 in 2023 to 264 in 2024[268]. - The top one customer accounted for 16.0% of revenues in 2024, compared to 14.4% in 2023, indicating a slight increase in revenue concentration[271]. Cash Flow and Financing - Cash and cash equivalents as of December 31, 2024, were $334.7 million, an increase from $257.2 million at the end of 2023[321]. - Net cash provided by operating activities decreased to $30.198 million in 2024 from $41.093 million in 2023, primarily due to changes in working capital[323]. - Net cash used in investing activities rose to $51.301 million in 2024, driven by payments related to the JUXT and Mobile Computing acquisitions[324]. - The company generated $101.162 million from financing activities in 2024, mainly from a public equity offering[325]. - The company has a revolving credit facility of $30 million, with zero outstanding as of December 31, 2024[319]. - The company is seeking to extend the term of its revolving credit facility, which is set to expire on March 15, 2025[320]. Risks and Legal Considerations - The company faces risks related to intellectual property, including potential unauthorized use and challenges in protecting its rights[199]. - There is uncertainty regarding the scope of intellectual property protection for AI models and software, which may impact the company's operations[199]. - The company may incur significant costs and management distraction from potential intellectual property infringement claims[206]. - Customer contracts often require the company to indemnify clients against potential infringement claims, which could lead to costly litigation[207]. - The company utilizes open source software, which poses risks of non-compliance with licensing terms that could affect sales and create liability[210]. - The company's bylaws limit the forum for stockholder disputes, potentially discouraging legal action[213]. - The price of the company's common stock may be volatile due to various factors, including changes in legal and regulatory frameworks[216]. - The concentration of ownership may lead to significant volatility in the stock price if major stockholders sell large amounts of common stock[221]. - The company has provisions in its certificate of incorporation and bylaws that could delay or prevent hostile takeovers and changes in control[224]. - Delaware law may prohibit stockholders holding 15% or more of the outstanding capital stock from engaging in certain business combinations for a specified period[225]. - The board of directors has the ability to issue preferred stock without stockholder approval, which could dilute the ownership of a hostile acquirer[226]. - The requirement for a special meeting of stockholders to be called only by the board of directors could delay stockholder actions[226]. - The company has a classified board of directors with staggered terms, which could delay changes in board membership[226]. - Advance notice procedures must be complied with for stockholders to nominate candidates or propose matters, potentially deterring unsolicited takeover attempts[226].

Financial Data and Key Metrics Changes - Grid Dynamics achieved record revenues of $100.3 million in Q4 2024, surpassing guidance of $95 million to $97 million, representing a year-over-year growth of 28.5% [45][46] - Non-GAAP EBITDA for Q4 was $15.6 million, exceeding guidance of $13.5 million to $15.5 million, driven by strong performance from both organic business and recent acquisitions [45][46] - The company ended Q4 with cash and cash equivalents totaling $334.7 million, up from $231.3 million in Q3 2024, largely due to a follow-on offering [55] Business Line Data and Key Metrics Changes - The retail vertical accounted for 32.6% of Q4 revenues, showing sequential growth of 9.7% and year-over-year growth of 33.1% [46] - The finance vertical exhibited the strongest performance with sequential growth of 63.8% and year-over-year growth of 180.1%, driven by increased demand from fintech and insurance customers [48] - The TMT vertical remained flat compared to Q3, while CPG and manufacturing represented 11.2% of revenues, growing sequentially by 14.8% and year-over-year by 16.4% [47][49] Market Data and Key Metrics Changes - The company signed three notable enterprise clients in Q4, including clients from the automotive industry, a global auction company, and a major grocery retail group [15][16] - AI initiatives are gaining momentum, with 130 identified AI opportunities in Q4, a 30% increase over Q3 [22][23] - Partnerships with hyperscalers contributed 18% of total revenue in 2024, with expectations for significant growth in 2025 [32] Company Strategy and Development Direction - The company aims for revenue growth of $415 million to $435 million in 2025, representing a potential growth of over 20% compared to 2024 [19][57] - Five priorities for 2025 include leveraging strengths in data and AI, increasing industry diversification, enhancing technology offerings, ensuring global support through the Follow the Sun strategy, and strengthening partnerships [20][21] - The acquisition of U.K.-based JUXT enhances the company's expertise in banking and financial services, expected to convert into opportunities in 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing improving trends in demand, growth in existing and new customers, and increasing demand for IT partners with strong technology focus [18] - The company is confident in its ability to achieve growth targets due to strong customer appreciation for its capabilities and the successful implementation of AI solutions [61][62] - Management highlighted the importance of large deal sizes and a strong pipeline of opportunities as key factors contributing to visibility for 2025 [131][134] Other Important Information - The company ended Q4 with a total headcount of 4,730, up from 4,298 in Q3 2024, reflecting growth from both organic business and acquisitions [50] - The company is focused on rationalizing its portfolio of non-strategic customers, which has led to a decline in the number of customers year-over-year [51] Q&A Session Summary Question: What is driving Grid Dynamics' strength compared to peers? - Management attributed the outperformance to consistent business relationships with clients, technology introduction, and scaling solutions [60][61] Question: Will growth in 2025 be broad-based? - Management indicated strong growth in CPG, TMT, and fintech sectors, with contributions from both top clients and new clients [64][66] Question: How is AI contributing to revenue? - AI is now a component of almost every engagement, with significant opportunities identified, reflecting a shift towards revenue generation initiatives [69][70] Question: What are the key drivers of revenue growth for 2025? - Management highlighted recruiting, pricing, and utilization improvements as key drivers for growth [77][78] Question: What is the expected margin profile for 2025? - Management advised not to model any margin compression for 2025, indicating a return to a positive margin slope [98] Question: Which initiatives have a head start for achieving 2025 guidance? - Investment in AI and technology enhancements are top priorities, with a focus on partnerships with hyperscalers [102][106] Question: Will there be benefits on the SG&A line from account rationalization and partnerships? - Management confirmed that while there will be investments, revenue growth will outpace OpEx growth [113][114]

Core Viewpoint - Grid Dynamics (GDYN) reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.07 per share a year ago, indicating a 20% earnings surprise [1][2] Financial Performance - The company achieved revenues of $100.28 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.46%, compared to $78.07 million in the same quarter last year [2] - Over the last four quarters, Grid Dynamics has exceeded consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Grid Dynamics shares have declined approximately 3% since the beginning of the year, while the S&P 500 has gained 4.5% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.09 for the upcoming quarter and $0.44 for the current fiscal year, with revenues expected to be $95.25 million and $408.19 million respectively [7] Industry Context - The Computers - IT Services industry, to which Grid Dynamics belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable environment for performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Revenue Growth - Fourth quarter 2024 revenues reached $100.3 million, a year-over-year growth of 28.5%[2] - Full year 2024 revenues totaled $350.6 million, up from $312.9 million in 2023, representing a 12.0% increase[11] - Revenues for the three months ended December 31, 2024, were $100,282 thousand, a 28.4% increase from $78,069 thousand in the same period of 2023[26] - Total revenue for Q4 2024 was $100,282 million, a 28.4% increase from $78,069 million in Q4 2023[41] - The Finance vertical experienced significant growth, with a year-over-year increase of 180.1%[2] - The Finance vertical saw substantial growth, with revenue increasing to $23,190 million in Q4 2024 from $8,280 million in Q4 2023, representing a 179.4% increase[41] - Retail revenue for the year ended December 31, 2024, was $113,957 million, slightly up from $102,551 million in 2023, maintaining a stable market share[41] Income and Earnings - GAAP net income for Q4 2024 was $4.5 million, or $0.05 per share, compared to $2.9 million, or $0.04 per share, in Q4 2023[6] - Non-GAAP net income for the full year 2024 was $37.2 million, or $0.47 per share, compared to $31.7 million, or $0.42 per share, in 2023[11] - Non-GAAP net income for Q4 2024 reached $10,284 million, up from $7,489 million in Q4 2023, reflecting a growth of 37.5%[37] - The company's GAAP diluted EPS for Q4 2024 was $0.05, compared to $0.04 in Q4 2023[37] - Non-GAAP diluted EPS for Q4 2024 was $0.12, up from $0.10 in Q4 2023, indicating a 20% increase[37] - Net income for the year ended December 31, 2024, was $4,041 thousand, compared to a net loss of $1,765 thousand in 2023[26] Expenses and Costs - The company reported total operating expenses of $129,110 thousand for the year ended December 31, 2024, compared to $118,726 thousand in 2023, a rise of 8.5%[26] - The company incurred acquisition-related costs of $43,072 thousand for the year ended December 31, 2024, compared to $17,830 thousand in 2023[30] - The company incurred $34,167 million in stock-based compensation for the year ended December 31, 2024, compared to $35,516 million in 2023, showing a decrease[37] - The company has implemented a restructuring plan, resulting in restructuring costs of $1,413 million for the year ended December 31, 2024[39] Cash and Assets - Cash and cash equivalents as of December 31, 2024, totaled $334.7 million, up from $257.2 million a year earlier[11] - Cash and cash equivalents increased to $334,655 thousand as of December 31, 2024, from $257,227 thousand in 2023, representing a 30% increase[28] - Total assets grew to $592,192 thousand as of December 31, 2024, up from $435,165 thousand in 2023, reflecting a 36.2% increase[28] Future Outlook - The company expects full year 2025 revenues to be between $415.0 million and $435.0 million, indicating a growth of 18.4% to 24.1% year-over-year[11] - The AI opportunities pipeline grew to over 130, representing a 30% increase from the previous quarter[4] Employment - Total headcount increased to 4,730 employees as of December 31, 2024, compared to 3,920 a year prior[11] EBITDA - Non-GAAP EBITDA for Q4 2024 was $15.6 million, compared to $10.7 million in Q4 2023[6] - Non-GAAP EBITDA for the year ended December 31, 2024, was $52,474 thousand, compared to $44,246 thousand in 2023, indicating an 18.6% increase[36]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Grid Dynamics (GDYN) - GDYN currently holds a Momentum Style Score of A, indicating strong momentum potential [2][13] - GDYN shares have increased by 7.22% over the past week, outperforming the Zacks Computers - IT Services industry, which declined by 1.34% during the same period [4] - Over the last month, GDYN's price change is 10.84%, significantly better than the industry's 0.21% performance [4] Earnings Outlook - In the past two months, four earnings estimates for GDYN have been revised upwards, while none have been lowered, raising the consensus estimate from $0.32 to $0.34 [10] - For the next fiscal year, three estimates have increased, with one downward revision noted [10] Performance Metrics - GDYN shares have risen by 49.33% over the past quarter and 53.91% over the last year, compared to the S&P 500's increases of 5.41% and 28.01%, respectively [11] - The average 20-day trading volume for GDYN is 606,429 shares, which is considered a bullish indicator when combined with rising stock prices [9] Investment Potential - GDYN is rated as a 1 (Strong Buy) stock, supported by its strong Momentum Score of A, making it a promising candidate for investors seeking short-term gains [7][13]

Core Points - Grid Dynamics Holdings Inc. will replace Revelyst Inc. in the S&P SmallCap 600 effective January 2, 2025 [1][2] - The acquisition of Revelyst by Strategic Value Partners is expected to close soon, pending final conditions [1] Summary by Category Company Changes - Grid Dynamics Holdings (Ticker: GDYN) will be added to the S&P SmallCap 600 [2] - Revelyst (Ticker: GEAR) will be removed from the S&P SmallCap 600 [2] Sector Information - Grid Dynamics operates in the Information Technology sector [2] - Revelyst operates in the Consumer Discretionary sector [2]